ACIT, CIRCLE-4(1), KOLKATA, KOLKATA vs. M/S KARAN POLYMERS(P) LTD., KOLKATA

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ITA 1847/KOL/2016Status: DisposedITAT Kolkata07 September 2018AY 2006-073 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) was justified in deleting the addition as no share capital was raised during the year, making the invocation of Section 68 unsustainable. Therefore, the Revenue's grounds of appeal were dismissed.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting an addition made under the head 'undisclosed income'. The CIT(A) found that the assessee had not raised any share capital during the year, and the opening and closing share capital as per audited books was Rs. 2,29,32,000/-.

What were the issues?

Whether the CIT(A) was justified in deleting the addition made by the AO under Section 68 on account of share capital when no share capital was raised during the year.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “D”, KOLKATA

Before: SH. J.SUDHAKAR REDDY & SH. S.S.VISWANETHRA RAVI

Hearing: 04.09.2018Pronounced: 07.09.2018

PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER

1.

This appeal filed by the Revenue against the order dated 12.07.2016 passed by CIT(A)-4, Kolkata for AY 2006-07.

2.

The only issue arises from Ground Nos. 1 & 2 raised by the Revenue as to whether the Ld.CIT(A) justified deleting the addition made by the AO under the head “undisclosed income” in the facts and circumstances of the case. It is noted from the order of Ld.CIT(A) that he found satisfied by examining the details available on record that the assessee had not raised any share capital during the year under consideration and the opening and closing share capital of the assessee as per the audited books of accounts was Rs.2,29,32,000/-. Therefore, in our opinion, no addition u/s 68 of the Income Tax Act, 1961 (in short “Act”) is not maintainable. The relevant portion of which is reproduced herein below:-

4.2. “I have considered the submission of the AR of the appellant in the backdrop of the assessment order. I find that primarily, the AO has made the impugned addition of Rs.80,00,000/- on account of share capital of the appellant on the premise that there was no explanation coming forth from the appellant on this count. From the submissions made by the assessee and the details available on record, I find that the assessee had not raised any share capital during the year. The opening & closing share capital of the assessee as per the audited books of accounts was Rs.2,29,32,000/-. It is therefore clearly discernible from the jurisdictional records that no share capital was raised by the assessee during the relevant FY 2005-06 and therefore the question of invocation of Section 68 and addition of Rs.80,00,000/- on account of share capital does not arise at all. In the circumstances I find that the initiation of proceedings u/s 148 was without application of mind and even the impugned addition made in the reassessment order was prima facie erroneous and unjustified. For the reasons & facts set out in the foregoing therefore, I hereby set aside the impugned order passed u/s 148 and also cancel the addition of Rs.80,00,000/- made u/s 68 therein. Ground Nos. 1 & 2 of the appeal are therefore allowed.”

3.

In view of the finding of Ld.CIT(A) and discussion made herein above, we find no infirmity in the order of Ld.CIT(A) and it is justified. Accordingly, Ground Nos. 1 & 2 raised by the Revenue are dismissed.

4.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 07.09.2018.

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